Bain戰(zhàn)略分析工具profit pool

1、Profit Pools and Core CompetenceDarral G ClarkeProfessor of ManagementThe Marriott SchoolBrigham Young University3/15/20221Profit Pools: A Fresh Look at StrategyOrit Gadiesh and James L. GilbertHarvard Business ReviewMay-June 19983/15/20222THE PC INDUSTRYS PROFIT POOLnValue chain focusnAxesnVertical

2、operating marginnHorizontalshare of industry data40%30201000100%share of industry revenuemicroprocessorsother componentspersonal computerssoftwareperipheralsservicesThe value chain for the PC industry includes six key activities; the profitability of the activities varies widely. Manufacturers compe

3、te in the largest but least-profitable segment of the chain.3/15/20223The Profit Pool LensnThe profit pool is the total profit earned in an industry at all points along the industrys value chainnSegment profitability may vary by customer group, product category, geographic market, or distribution ch

4、annelnProfit concentration may be very different than revenue concentrationnShape of the profit pool reflects the competitive dynamics of a business Interactions of companies and customers Competitive strategies of competitorsnProduct pools are not stagnant3/15/20224THE U.S. AUTO INDUSTRYS PROFIT PO

5、OL100%operating marginsource: Harvard Business Review, May-June 1998auto rental25%1510500share of industry revenueauto manufacturingnew car dealersused car dealersauto loansauto insuranceaftermarket parts20leasingwarrantygasolineservice repairThe automotive industry encompasses many value-chain acti

6、vities. The way that profits and revenues are distributed among these activities varies greatly. The most profitable areas of the car business are not the ones that generate the biggest revenues.3/15/20225Profit Pools: Company ExamplesCompaniesAutomakersU-HaulElevators (OTIS)Harley DavidsonPolaroidC

7、ore BusinessAuto manufacturingTruck RentalElevator ManufacturingMotorcyclesInstant Photography CamerasSources of Highest ROIAuto leasing, insurancePacking materials, storageServiceAccessories (consumer products), leasing, service, restaurantsFilm3/15/20226Managerial ImplicationsnFocus on growth and

8、market share can lead a company to focus on unprofitable segments of an industrynTodays deep revenue revenue pool may be tomorrows dry hole.nThe goal should be to focus on profitable opportunitiesnIndustry should be considered more broadly than traditional definitionnAutomobile industry includes Com

9、ponent manufacture and supply New car assembly and delivery New car warrantee and service New car financing and insurance Used car sales and service3/15/20227Turbulent industriesnProfit pools are especially important and useful in industries undergoing deregulation and/or technological changenSuch c

10、hanges can open new profit pool opportunities and drain old onesnChoke points may change or be eliminatednOpportunities for either forward or vertical integration may emergenCurrent vertical integration may be disintermediated3/15/20228Creating and managing a profit poolnProfit pool analysis may ind

11、icate new opportunities or threatsnImperativesnBe open to a new perspective on your business and industrynDeveloping new strategy may require overturning elements of the current strategynBe open to reevaluate the role played by current competitorsnBe vigilant to identify possibility that new entrant

12、s may seek to enter your industry with radical strategies 3/15/20229Looking Ahead: Profit Pools and the Five ForcesnProfit pools are computed by multiplying the size of the revenue by the unit profit marginnEssentially an accounting process- no theorynMost valuable in situations in which external co

13、nditions are essential stable and/or unimportantn(Often dominated by internal data alone)nThe five forces tells us (which will study next)nthe underlying determinants that determine both the revenue size and the unit profit marginnThe profit drivers which allow us to forecast the direction of change

14、3/15/202210Marakon RunnersThomas A. StewartFortuneSept. 28, 19983/15/202211Marakon Associatess Approach to Corporate StrategynConsultants to many large corporationsnCoca Cola, HP, GM, CitiCorp, etc.nClients have returns 3.1% higher than industry peer groupnGoal is to increase shareholder value throu

15、gh analysis of economic profitnDeep drilling in business data to measure value creation Product segments Customer segments3/15/202212How Strategy HappensnLearning where value is creatednWaterfall charts by product and customer segmentsnEvaluating strategynIndustry average profit per unitnCompanys pr

16、ofit vs industry averagenManaging valuenCurrent strategynChange product focusnChange customer focus3/15/202213Learning where value is createdProduct segmentsCustomer segmentsProfit/loss ($ per unit)Volume (units)Volume (units)03/15/202214Evaluating StrategyCompany profit per unitIndustry-average pro

17、fit per unit3/15/202215Managing for valueCurrentstrategyChangeproductfocusChange CustomerfocusValue3/15/202216Application to our casesnRetail industry (Wal*Mart)nSoft drink industry (Coca-Cola and PepsiCo) nSteel (Nucor) and aluminum cans (CC&S)nHi tech (Intel, Cisco, and Dell)nVideo games (Nint

18、endo)nWeb businesses (eBay and Yahoo!)3/15/202217The Core Competence of the CorporationPrahalad, C. K. and Gary HamelHarvard Business Review, May-June 19903/15/202218Core CompetencenA Firm is made up of resourcesnpeople, patents, brand names, plant &equipment, processes, etcnA competence is the

19、ability to employ diverse skills and resources to perform tasks and activities.nA core competence is a broadly based and/or a broadly applied fundamental capability. 3/15/202219Competence and TechnologynCompetence is not the same as technologynCompetence requiresntechnologiesnsocial organizationncol

20、lective learning3/15/202220Core competence questions:nWhat are we really good at?nHow can we build upon it?nWhat do we need to be good at?3/15/202221Characteristics of Effective CompetenciesnDurability: Technical equipment can be short lived. Reputation or knowledge may depreciate more slowly.nTrans

21、parency: The more complex the source of competence, the harder it is to imitate it.nTransferability: The availability of resources to competitors.nReplicability: A competitors internal ability to replicate a competence using available resources.3/15/202222Choosing CompetenciesnHow central is this co

22、mpetence to our success in the market?nHow long could we preserve our competitiveness in this business without this particular competence?nWhat future opportunities would be foreclosed if we were to lose this particular competence?3/15/202223Core Competence and Core ProductsEndProducts/ServicesCore

23、ProductsCore Competence3/15/202224A Hierarchy of CompetenciesSupplemental CapabilitiesEnabling CapabilitiesCore Capabilities3/15/202225Building Strategy from CapabilitiesStrategyCapabilitiesResources1. Identify resources, appraiserelative strengths and weaknesses. Leverage use of resources2. Identif

24、y capabilities. What do we domore effectively than competitors? Identify resource inputs to capabilities.3. Appraise rent-generating potential resources and capabilities in terms of:sustainable advantage, inappropriability4. Select strategy that best exploits the firms resources and capabilities rel

25、a-tive to external opportunities.5. Identify resourcegaps that need to befilled.Invest in replenishing,augmenting, and up-grading the firmsresource base.CompetitiveAdvantageSource: Robert M. Grant, “The Resource-Based Theory of Competitive Advantage,”California Management Review, Spring,1991, page 1

26、51.3/15/202226How to map your industrys profit poolOrit Gadiesh and James L. GilbertHarvard Business ReviewMay-June 19983/15/202227A straight forward exercise with complicationsnConcept is straight forwardnDefine value chain activitiesnDetermine their size and profitabilitynApplication of concept is

27、 complicatednFinancial data doesnt correspond to value chain activitiesnCompany data is aggregated across businessesnProducts, customer purchases, channel volumes rarely match up with boundaries of an activitynConsiderable creativity is required3/15/202228Four step processnDefine the poolnDetermine

28、the size of the poolnDetermine the distribution of profitsnReconcile the estimates3/15/202229Four step processDefine the poolDetermine the size of the poolDetermine profit distributionReconcile the estimatesTask: determine which value-chain activity influence profits now and in the futureDevelop a b

29、aseline estimate of cumulative profits generated by all profit pool activitiesDevelop estimate of the profits generated by each activityCompare the outputs of steps 2 & 3GuidelinesTake a broad view of the value chain(beyond traditional industry definition)Seek a rough but accurate estimateShift

30、between aggregation and disaggregation in your analysisIf numbers dont add up,Check assumption and calculationsExamine industry from three perspective: own, other players, customersTake easiest route: go where the data areDo own economics first, then large pure players, large mixed, smallerCollect a

31、dditional dataDont disaggregate more than necessaryTake at least two viewpoints: company level and product levelUse proxy measures where necessaryResolve inconsistenciesdont ignore themOutputProfit pool listEstimate of total pool profits, (range)Point estimate of profits for each value chain activityFinal estimates of activity and total pool profits3/15/202230What is “profit” anyway?nCan be thought of in three ways (all of which may be relevant for profit pool analysi